Oil prices drop concerns of global economic slowdown

Chinese shipowners have quit hauling Iranian crude oil, while Iran has been putting in place measures to ensure its trade with China continues, despite the upcoming second round of USA sanctions, Kallanish Energy learns.

US investment bank Jefferies said on Friday there was an emerging "lack of demand" for crude oil and refined products.

Energy consultancy FGE says it expects this figure to drop below 1 million bpd by mid-2019.

Signs of tighter supply countered concern about slowing oil demand stemming partly from the trade dispute between the USA and China, the world's two largest economies.

Brent crude oil futures were at $74.50 per barrel at 0105 GMT, up 7 cents from their last close.

The October contract added US$2.02 to settle at US$67.86 yesterday, the highest closing price for the front-month futures since Aug 7.

Crude trading on Thursday resumed a posture more in keeping with previous weeks than in the past few days, with both benchmarks losing some ground due to China imposing 25 percent tariffs on us products.

The challenge now is that there are reports that the United States crude oil inventories have fallen in the last one week. Instead, both countries activated another round of dueling tariffs on US$16 billion worth of each other's goods.

In US oil markets, a decline in commercial crude inventories provided WTI with stronger support than Brent.

U.S. crude inventories fell 5.8-million barrels last week, the Energy Information Administration (EIA) said, more than the 1.5-million-barrel draw forecast by analysts polled by Reuters.

Meanwhile, China, the world's biggest oil importer and Iran's biggest customer, is said to have rejected a United States request to halt purchases from the producer, dealing a blow to Trump's efforts to isolate the Middle East nation and force it into negotiations.

That means the world's three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.